Alberta is calling not just residents, but real estate agents, too.

As Canadians continue to flock to the province in search of better value in the real estate market, so too have agents looking to profit off of the increased interest. The surge of not only residents but also licensed professionals is a mixed bag according to some local agents on the ground.

Dramatic rise in applications for Alberta licensing

“There’s an unbelievable amount of people currently in the system looking to get their license in Alberta,” says Brad McCallum, realtor and owner of the McCallum Group, which is with Real Broker and based in Calgary. “Five or six months ago, it was anywhere from 3,500 to 4,500 people, or maybe even a higher number, enrolled in some part of their process to get licensed in Alberta.” 

A rush of new agents is joined by those who are interested in transferring. From January 2018 to December 2020, the Real Estate Council of Alberta (RECA) received 399 mobility applications from agents, already licensed in one province, looking to get a license in Alberta. That number rose dramatically from January 2021 to February of this year, with 1,385 applications across both real estate and mortgage. The majority came from British Columbia and Ontario.

Calgary: A competitive market for both buyers and agents

“Being a brand new agent in this market is probably tough,” says McCallum. “There’s very low inventory in the city and only so many transactions. This year was a slightly slower start, but our team of five is catching up now. There are lots of deals going on conditionally. It’s atypical business.”

Alberta in general is trending alongside the rest of the country, with a 2024 buying season well underway, where inventory is minimal, sales are brisk and bidding wars continue to pop up on occasion. Calgary in particular remains a competitive market, drawing interest from those in Vancouver and Toronto especially. 

According to the Calgary Real Estate Board, compared to the year before, February saw sales increase (22.8 per cent) and the benchmark price increase (10.3 per cent). In the same period, average days on market decreased (26.8 per cent) and inventory decreased (14.2 per cent). It adds up to a competitive market not just for buyers, but for agents as well.

A ‘capitalistic’ strategy ‘based on a scarcity mindset’

John Carter, broker/owner of Re/Max River City in Edmonton, is wary of agents who are working in Alberta without physically being there. He sees it as selfish, with these out-of-towners looking to profit from an interest in the province without doing the hard work on the ground.

“It’s very capitalistic,” says Carter. “It’s not about serving clients. It’s based on a scarcity mindset.” He says the vast majority are “with some brokerage no one has ever heard of” and have a 647 or 416 area code. 

“They’re writing an offer sight unseen,” and, in his opinion, “There’s a lot of negligence … They’re not practicing to their realtor’s code in Alberta, and not cooperating well with realtor colleagues.”

Carter supports the idea of mobility among provinces: he was licensed in Ontario from 2011 to 2014 and has been licensed in Alberta since 2002. However, he wonders if the process is too simple and can be taken advantage of. 

“That’s failing right now,” he continues. “I like the idea of mobility, but we’re finding I would say less than 20 per cent of agents in my firsthand experience are relocating.” According to Carter, “The vast number of professionals feel the barrier of entry to be too simple, too easy.” As a result, he says, “There are too many that aren’t following the rules.” 

Carter references examples of agents from out of town without access to the local board who call the listing agent, as well as others who don’t want to refer clients so they don’t give up a commission. While he doesn’t necessarily think all of these actions are predatory, sometimes it’s a lack of knowledge about rules and competency on the part of the agent.

Some try to skirt RECA’s rules but ‘the low road isn’t going to raise your business’

Arthur Chan, real estate broker at Re/Max Hallmark Toronto, is among those who recently got licensed in Alberta. When asked about the main reason for doing so, he says, “To sell, promote pre-construction projects in Calgary. “I wanted to offer my clients and investors an entry-level price of homeownership that’s more affordable vs Toronto. I’ve relocated over six families in the past eight months.” 

Chan, who’s been an associate at Re/Max Central in Calgary for about 18 months, says he uses Zoom, Google Maps and other software to assist clients remotely, but he also makes sure to get on the ground. 

“As for my clients wanting to buy resale, I fly down with them and conduct showings in person. They can get a better sense and feel of the neighbourhood and dwelling before making the purchase, and that type of feeling can only be evoked in person.”

Chan does note there are those trying to skirt the rules. “Some agents have been channeling (hiding) through builder’s referral agreements. However, that’s circumventing RECA’s strict policy and a major violation.”

McCallum acknowledges that there may be some bad actors but that their way of doing business simply won’t succeed. “There’s always going to be those realtors in the marketplace, but the low road isn’t going to raise your business. Consumers are pretty smart and people are doing a lot of research.”

Being on the ground: A huge advantage

His group is particularly active on social media and YouTube and credits some of its success to attracting those from out of province to come to Calgary.  While McCallum has been in Calgary for many years, he’s happy to serve residents as well as those looking to move there. An increase in remote work and shifting social priorities make Calgary attractive to many in B.C. and Ontario, contributing to his success. “I’ve only got a business because the world is willing to change,” he points out.

Part of the reason the McCallum Group is doing well is that they’re on the ground, which is a huge advantage compared to agents working remotely. “If you’re not there, if you don’t have someone on the team in the marketplace, someone to turn off the lights, lock the door, be present for a showing, there are definitely challenges.”

In such a tight market, Carter sees the lack of presence as negligence, putting the client at a disadvantage and susceptible to overpaying more or losing out on bids entirely simply because they could be alone with a listing agent there to support the seller, not the potential buyer. “How can you do comparables, pricing and strategy?”

In addition to providing the best service to clients by being physically in Alberta, there’s another reason Chan doesn’t mind flying out to Calgary. “I find it’s more laid back,” he says. “No one seems to be in a major hurry.”

A decade can bring significant changes to any landscape, and the Canadian real estate market is no exception. 

In a recent blog post, Zoocasa delved into the evolution of the Canadian real estate market over the past 10 years. 

In 2013, the country was still recovering from the aftermath of the global financial crisis, and buyer sentiment was cautiously optimistic. Fast-forward to 2023, and the market is adapting to the post-pandemic era, facing interest rate hikes and shifting demographics.

Prices: A tale of two markets

Then: Consistent price growth 

A glance back to 2013 reveals a real estate market characterized by steady price growth. CREA reported an average national price of $365,700 in January, a slight dip from the previous year’s peak. Throughout the year, prices climbed, culminating in a 4.1 per cent increase to $380,600 by December. While these figures might seem modest in hindsight, they marked a historic high at the time. 

According to the Bank of Canada’s Housing Affordability Index, unaffordability increased from Q1 of 2013 to Q4 of 2013 and has since never gone as low as in Q1 of 2013. 

Regions like Greater Toronto and Metro Vancouver experienced predictable price growth, with benchmarks rising by 6.8 per cent and 4.7 per cent, respectively, over the same period.

Now: Prices stabilizing after pandemic spike 

In stark contrast, the past few years have witnessed remarkable price volatility. After surging to $855,800 in March 2022, the national average price plummeted, bottoming at $705,000 in January 2023 — the lowest since August 2021, according to CREA. 

A resurgence of buyer confidence and limited inventory since fueled a rebound, driving prices to $760,600 by June. The rollercoaster ride of recent years seems to be settling into a more stable pattern, hinting at a future of measured growth. The recent cooling off in price inclines can be attributed, in part, to interest rate hikes by the Bank of Canada.

Changing demographics 

Then: Homebuyers drawn to urban centres 

A decade ago, the allure of urban centers such as Greater Vancouver, Greater Toronto, Calgary, and Hamilton-Burlington drew prospective buyers, despite the lingering effects of stricter mortgage lending guidelines. Low-interest rates and affordable mortgage payments incentivized first-time homebuyers, contributing to a moderate resurgence in the market.

Now: Newcomers and first-time buyers creating demand 

Today’s real estate landscape tells a different story. Record immigration has propelled Canada’s population to 40 million, intensifying the demand for housing. As inventory dwindles, competition among buyers heats up, pushing prices higher. Additionally, a wave of first-time buyers has entered the scene, encouraged by adjusted interest rate expectations and a preference for affordability and spacious living spaces, fostering interest in smaller maritime cities and the prairies.

Mortgage rates: From favourable to challenging

Then: Interest rates at historically low levels

In 2013, historically low-interest rates prevailed, creating favourable borrowing conditions. The overnight lending rate remained at 1.0 per cent until 2015 and didn’t exceed 1.25 per cent until 2018. Such conditions provided variable-rate holders with advantageous terms, while fixed-rate holders faced slightly higher rates.

Now: Highest borrowing costs in more than 10 years 

A shift in the economic landscape, precipitated by the pandemic-induced price surge and rising inflation, has led the Bank of Canada to raise interest rates multiple times since 2022. The overnight lending rate currently stands at 5.0 percent, significantly impacting mortgage affordability. Fixed rates have also climbed, with the average 5-year fixed rate reaching 6.79 per cent. While present borrowing costs pose challenges, historical patterns suggest that rates may gradually decrease in the coming years.

House type: The enduring appeal of condos

Then: Condo boom 

In 2013, apartments, particularly in Vancouver and Toronto, dominated new construction as demand for affordable housing surged. Condo sales enjoyed robust growth, reflecting a preference for these more attainable properties.

Now: Condo demand remains hot 

Fast-forward to 2023, and condos continue to hold the market. First-time buyers, who largely remained on the sidelines in the preceding year, are flocking to condos as an entry point into homeownership. These properties offer an affordable gateway into the market, especially in smaller cities and regions. In Toronto and Vancouver, condo apartments have demonstrated impressive year-over-year growth, reflecting sustained demand.